Senate Majority Leader Chuck Schumer announced Thursday that he had reached a deal with Senate Minority Leader Mitch McConnell to extend the debt ceiling and avert the federal government defaulting on its obligations.
Two days after Treasury Secretary Janet Yellen warned that a failure to do so could throw the country into recession, a deal was struck between the New York Democrat and Kentucky Republican to fund the government up until Dec. 3, Axios reported. The federal government was set to run out of money on Oct. 18.
The agreement between Schumer and McConnell will raise the debt limit by $480 billion in the short term, according to the report. Schumer said on the Senate floor he hopes to get the deal done by the end of Thursday.
“We have reached agreement to extend the debt ceiling through early December and it’s our hope we can get this done as soon as today,” he said.
The agreement was announced after McConnell offered a resolution on Wednesday.
Axios reported that as part of the deal to fund the federal government until December, McConnell offered the $480 billion and demanded to “fast-track the suspension of the debt limit using the budget reconciliation process.”
“We have already made it clear we would assist in expediting the [budget] reconciliation process for stand-alone debt-limit legislation,” the minority leader said Wednesday.
McConnell had earlier called the potential for default “the Democrats’ self-created debt limit crisis.”
“Republicans remain the only party with a plan to prevent default. We have already made it clear we would assist in expediting the 304 reconciliation process for stand-alone debt limit legislation,” McConnell said in a statement.
“To protect the American people from a near-term Democrat-created crisis, we will also allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December,” he said.
My new statement on the Democrats’ self-created debt limit crisis: pic.twitter.com/XwuqyS9oZ0
— Leader McConnell (@LeaderMcConnell) October 6, 2021
Schumer on Twitter later called the potential for default a “GOP-manufactured” crisis.
Democrats are working to bring this GOP-manufactured default crisis to a swift end and avoid irreparable economic harm to people and families.
Today, the Senate will vote on moving forward on House-passed legislation to suspend the debt ceiling.
— Chuck Schumer (@SenSchumer) October 6, 2021
Yellen warned of dire consequences of a default in an interview with CNBC’s “Squawk Box” this week.
— Squawk Box (@SquawkCNBC) October 5, 2021
“It would be catastrophic to not pay the government’s bills, for us to be in a position where we lacked the resources to pay the government’s bills,” the treasury secretary said. “I fully expect it would cause a recession as well.”
“U.S. Treasury securities have long been viewed as the safest asset on the planet,” Yellen said. “That partly accounts for the reserve status of the dollar. And placing that in question by failing to pay any of our bills that come due would really be a catastrophic outcome.”
Former President Donald Trump issued a statement late Wednesday slamming McConnell for being weak-kneed when it appeared a deal with Democrats was close.
“Looks like Mitch McConnell is folding to the Democrats, again. He’s got all of the cards with the debt ceiling, it’s time to play the hand. Don’t let them destroy our Country!” – President Donald J. Trump pic.twitter.com/YfDejLfade
— Liz Harrington (@realLizUSA) October 6, 2021
“Looks like Mitch McConnell is folding to the Democrats, again,” Trump said in a statement. “He’s got all of the cards with the debt ceiling, it’s time to play the hand. Don’t let them destroy our Country!”
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